Agri merger to benefit HDP farmers and promote the greater spread of ownership following Competition Tribunal approval

Agri merger to benefit HDP farmers and promote the greater spread of ownership following Competition Tribunal approval

Conditions imposed by the Competition Tribunal on the merger between VKB Beleggings (Pty) Ltd ("VKB") and Griekwaland Wes Korporatief Limited (“GWK”) will protect jobs and promote the greater spread of ownership. Conditions relating to a Finance Fund for historically disadvantaged persons (“HDPs) will also enable HDP farmers and entities to enter into agricultural markets which the merging parties form part of.

The Tribunal’s order and reasons will be available on www.comptrib.co.za. In summary, the Tribunal concluded that the proposed merger is unlikely to substantially prevent or lessen competition in any relevant market in South Africa, or to have a negative impact on the public interest. However, to remedy concerns regarding the greater spread of ownership i.e. whether GWK employees would benefit from the pre-existing employee share ownership structure of VKB after the merger, the Tribunal approved the transaction subject to the following conditions:

A moratorium on retrenchments i.e. no employees of the VKB Group or the GWK Group will be retrenched as a result of the merger for 36 months from the merger implementation date;
VKB and GWK will ensure that qualifying workers (permanent VKB or GWK employees who have been employed for a minimum of 12 months) will become beneficiaries of the VKB employee share ownership schemes (“ESOPS”) i.e. the VKB Landbou Workers Trust or the VKB Agri Processors Workers Trust, within three months of the merger implementation date; and
VKB and GWK will facilitate the provision of financing, in terms of their applicable credit policies and relevant legislation, to HDPs in the value chains and the geographical areas where they operate (currently and in future) over a 36-month period from the merger implementation date. The financing may include the facilitation of production loans to provide credit for inputs, monthly accounts, financing for acquiring implements and whole goods, term loans, financing for contract growth as well as the facilitation of financing to specific projects and/or communities.

Both VKB and GWK are involved in a wide range of activities related to the agriculture industry. These include grain storage and handling, grain trade and procurement, grain milling, trade retail and agricultural finance businesses.